In
its scope and emphasis, each Five Year Plan embodies an assessment of
the current economic and social situation and of the progress of the economy
over a period of years and at the same time, it seeks to relate the next
phase of development to the country's basic social objectives and the
perspective of long-term economic growth. These latter have been set out
in Chapters I andII. In drawing up the Third Plan the principal
aims have been the following :

to secure an increase
in national income of over 5 per cent per annum, the pattern of investment
being designed also to sustain this rate of growth during subsequent
Plan periods ;

to achieve self-sufficiency
in foodgrains and increase agricultural production to meet the requirements
of industry and exports;

to expand basic
industries like steel, chemicals industries, fuel and power and establish
machine-building capacity, so that the requirements of further industrialisation
can be met within a period of ten years or so mainly from the country's
own resources;

to utilise to the
fullest possible extent the manpower resources of the country and to
ensure a substantial expansion in employment opportunities; and

to establish progressively
greater equality of opportunity and to bring about reduction in disparities
in income and wealth and a more even distribution of economic power.

2.
The period of the Third Plan represents the first stage of a decade or
more of intensive development leading to a self-reliant and self-generating
economy. As a result of progress achieved during the First and the Second
Plan, the foundations for rapid economic growth have been laid. India's
economy is now much larger in size and in the range of its operations
and has become both more dynamic and more complex. In all directions there
are large and growing demands to be met. Considerable investments have
also to be made in projects and programmes whose output will be available
only in the course of the Fourth Plan. Thus, the Third Plan will call
for the maximum rate of investment that can be achieved.

3.
The general pattern of development followed in the Third Plan necessarily
flows, in large part, from the basic approach and experience of the Second
Plan. However, in some important respect it represents a wider view of
the problems of development and calls both for more intensive effort and
a greater sense of urgency. In particular, the Third Plan will be directed
towards strengthening the agricultural economy, developing industry, power
and transport and hastening the process of industrial and technological
change, achieving marked progress towards equality of opportunity and
the socialist pattern of society, and providing employment for the entire
addition to the labour force. Inevitably, a plan of development with these
aims will make far reaching demands on the nation. It is essential that
the burdens of development during the Third Plan should be equitably distributed
and, at each stage, the economic, fiscal and other policies adopted should
bring about improvements in the welfare and living standards of the bulk
of the people.

4.
In the scheme of development during the Third Plan the first priority
necessarily belongs to agriculture. Experience in the first two Plans,
and especially in the Second, has shown that the rate of growth in agricultural
production is one of the main limiting factors in the progress of the
Indian economy. Agricultural production has, therefore, to be increased
to the largest extent feasible, and adequate resources have to be provided
under the Third Plan for realising the agricultural targets. The rural
economy has to be diversified and the proportion of the population dependent
on agriculture gradually diminished. These are essential aims if the incomes
and levels of living of the rural population are to rise steadily and
to keep pace with incomes in other sectors. Both in formulating and in
implementing programmes for the development of agriculture and the rural
economy during the Third Plan, the guiding consideration is that whatever
is physically practicable should be made financially possible, and the
potential of each area should be developed to the utmost extent possible.

With
the establishment of democratic institutions at the district, block and
village levels, responsibility and initiative in economic and social development
in rural areas will rest increasingly with popular organisationswith
Zila Parishads, Panchayat Samitis and Village Panchayats and with co-operatives.
In the pattern of rural development, service cooperatives are to be organised
on the basis of the village community as the primary unit. Cooperative
farming, which is vital for rural progress, is in its essence a logical
growth of cooperation and the approach of community development at the
village level.

The
Third Plan envisages concentrated effort in agriculture on a scale calling
for the participation of millions of peasant families of agricultural
workers in village production plans and in large scale programmes of irrigation,
soil conservation, dry farming, afforestation and the development of local
manurial resources. One of the main aims of the Plan, therefore, is to
harness ihe manpower resources available in rural areas. This is to be
achieved through the programmes of development for which the Plan provides,
supplemented by extensive rural works programmes for utilising manpower
resources in the villages, especially for increasing agricultural production.

5.
In the Third Plan, as in the Second, the development of basic industries
such as steel, fuel and power and machine-building and chemical industries
is fundamental to rapid economic growth. These industries largely determine
the pace at which the economy can become self-reliant and self-generating.
Programmes for industrial development have been drawn up from the point
of view of the needs and priorities of the economy as a whole, the public
and the private sectors being considered together. However, while the
private sector will have a large contribution to make, the role of the
public sector in the development of the economy will become even more
dominant. An expanding public sector, engaged specially in developing
basic industries and producing large surpluses for development, will itself
be one of the most important factors determining the rate at which the
economy can grow. Moreover, the Third Plan will carry further the present
efforts to build up small industries as a vital segment in ths industrial
structure by promoting greater integration between large scale and small
scale industries, spreading the benefits of industrialisation to small
towns and rural areas and introducing improved techniques in the traditional
rural industries.

6.
Considerable emphasis, is being given in the Third Plan to the development
of education and other social services. In a scheme of development which
relies heavily on public understanding and response and on cooperation
and voluntary effort, the significance of these programmes cannot be too
greatly stressed. They are essential for ensuring a fair balance between
economic and social development and, equally, for realising the economic
aims of the Plan. Large technological changes and increases in productivity
cannot be achieved without greatly strengthening the educational base
of the community and improving living conditions. Some of the programmes
included in the Plan for social services are directly linked with economic
development, such as scientific research, technical education and the
training of craftsmen, family planning, and the provision for housing
and urban development. There are others which are indispensable on larger
social considerations and, over a period, exert a powerful influence on
the pace of economic progress, such as the expansion of facilities for
education, control of diseases, development of health and medical services,
award of scholarships, supply of drinking water in villages and towns,
and the provision of welfare services for the less developed sections
of the community. Within the limits of the resources available, these
and other needs are being provided for in the Third Plan. However, it
is obvious that in some directions, and more especially in education,
in rural water supply and in family planning, as the Plan proceeds, every
effort must be made to secure the largest measure of advance possible.

7.
As has been explained earlier, until the economy has been strengthened
considerably, it is difficult to provide work at an adequate level of
remuneration to the entire labour force. A twofold approach has, therefore,
to be adopted. In the first place, development programmes included in
ths Plan have to be worked in such a way as to yield the maximum employment
of which they are capable. They have to be implemented in an integrated
manner and adapted to the actual requirements of each area. Secondly,
in many fields, where manpower can be used more intensively, development
programmes under the Plan can be speeded up and enlarged to the extent
necessary in the later stages of the Plan. Action along these lines will
be required specially in areas with heavy pressure of population and in
which there is considerable under-employment. It is at present reckoned
that development programmes in the Plan may provide additional employment
to the extent of about 14 million as against the increase in the labour
force during the Third Plan of about 17 million. The balance is proposed
to be taken care of through large-scale rural works programmes, village
and small industries and other means.

8.
In preparing the Third Plan the requirements of the economy as a whole
and in different sectors have been considered carefully. The Plan takes
into account the results of development over the past ten years, the increased
expectations of the people, the implications of growth in population and
of large-scale industrialisation, and the need to mobilise the domestic
resources of the country to the greatest extent possible. A plan of smaller
dimensions than those envisaged would prove altogether inadequate. For
achieving a cumulative rate of growth of over 5 per cent per annum, it
will be necessary to undertake net investment to the extent of more than
14 per cent of the national income as compared to the present level of
about 11.5 per cent. This involves raising the rate of domestic savings
from about 8.5 per cent at present to about 11.5 per cent by the end of
the Third Plan. Domestic resources will need to be supplemented in substantial
measure by external assistance, primarily to finance the import of vital
capital goods which cannot be immediately produced within the country
and to provide a measure of support to the balance of payments. Dependence
at this stage of development on external resources serves to emphasise
the importance of policies and measures for import substitution and for
increasing export earnings during the Third Plan.

9.
In the scheme of production for the Third Plan care has been taken to
provide for adequate supplies of foodgrains and other consumer goods.
Nevertheless, it is inevitable that from time to time inflationary pressures
may emerge. The Plan, therefore, postulates a price policy which will
ensure that the movements of relative prices are in keeping with its priorities
and targets and that the prices of essential goods which enter into the
consumption of low income groups do not rise unduly. It will also be essential
to restrain the consumption of relatively non-essential goods and services.
Along with this, in planning the pattern of production, care must be taken
to avoid the use of the limited resources available in the production
of relatively non-essential goods and services. These measures are important
not only for securing rapid development under conditions of economic stability
but are also necessary for the mobilisation of the domestic resources
and the foreign exchange needed for the successful implementation of the
Third Plan. The extent to which the resources required for the Plan can
be raised is in no small degree dependent on the manner in which it is
implemented, especially the efficiency with which various projects are
constructed and operated, the extent to which the available capacities
in agriculture, industry, power, transport and elsewhere are utilised,
and the intensive use of the country's manpower resources. The financial
requirements of the Third Plan as described in the following Chapter are
distinctly higher than the estimates of resources at present available.
To be able to force the pace of development, there must be a continuing
effort to mobilise financial resources on a large scale. Recent studies
suggest that in several directions this larger effort is within the range
of practical achievement.

10.
In the Third Plan stress is being placed on the careful phasing of projects
in relation to one another. At each stage in development, there should
be a series of projects under execution, ensuring continuity both in planning
and in the flow of benefits. Some measure of balance must be preserved
between projects with long gestation periods and those which can be completed
over relatively short periods. In phasing projects, there has to be strict
regard to the requirements of physical planning, especially planning of
manpower and the provision of materials and ancillary services including
power and transport. In the related sectors of industry, transport and
power, during each phase of development, close coordination in planning
and execution is essential not only for new projects, but equally, for
achieving rising levels of production from the existing plants. The programme
of industry, along with power, transport, scientific research and technical
education, included in the Third Plan, is conceived of as a continuous
and integrated whole. Every effort has, therefore, to be made to initiate
and complete within the shortest possible time schemes which will help
to raise the potential for growth within the economy. Large projects take
considerable periods, but in the early stages the investments required
for them are of relatively small magnitude. By speeding up preparatory
work on them, invaluable tune can be gained.

11.
In the Third Plan, as in the Second, the plans of States have great importance
for the rapid development of the national economy. Important national
objectives, as in agriculture, education and other social services, and
in the utilisation of rural manpower, can be realised only in the measure
in which the plans of States are carried out successfully. They bear closely
on the welfare of the people as a whole and, to a large extent, it is
through them that a rise in the levels of living for the weaker sections
of the community and for the less developed areas can be secured. With
the development of large scale industries, specially of basic and heavy
industries, State plans have to provide on a large scale for the development
of power and technical education, for schemes of housing and urban development,
and for measures to achieve closer integration of the rural with the industrial
economy. In formulating the plans of States under the Third Plan and determining
their size and patterns, to the extent possible, these considerations
have been kept in view.

12.
To a greater extent than in the past, during the Third Plan, the direction
and management of the Indian economy will call for improved methods and
machinery for planning and execution, better statistical and economic
intelligence, greater appreciation of technological and other developments
occurring in different fields, fuller knowledge of the country's potential
resources and, generally, for more systematic analysis and research. For
every large programme and every major project or group of allied projects,
there is need for careful evaluation of progress. This is being provided
for under the Third Plan. Along with it, over a wide area, improvements
in statistical data must be secured, notably in the estimation of national
income and of capital formation, in the statistics of agricultural and
industrial production, distribution and employment, in vital statistics,
and in the collection and study of data relating to consumer expenditure,
costs of living and the distribution of income.

13.
The programme of economic and social studies undertaken during the first
two Plans, the results of which are now becoming available, was devoted
in the main to investigations of conditions of migration and employment
in cities, studies of land reform and farm management, surveys of cottage
and small scale industries and evaluation of irrigation benefits, and
to selected problems of social welfare and administration. To a limited
extent, analytical studies on the broader aspects of the economy were
also taken in hand. In the programme of research for the Third Plan, to
be undertaken through universities and leading research institutions as
well as by the Planning Commission and other agencies, a great deal of
attention will need to be given to problems such as efficiency of investment
in different sectors of the economy, pricing policies and techniques,
foreign trade and the balance of payments, problems of organisation and
administration in relation to planned development, problems of social
change and social conflict, studies bearing on regional and urban development,
and investigations into the working of programmes for land reform, cooperation,
community development, rural electrification, small scale industries and
others. Many of these studies will be of considerable value in the preparation
of plans for long-term development. They will also greatly facilitate
the realisation of the specific aims of the Third Plan and provide useful
criteria for evaluating performance and shifting the lessons to be drawn
from experience in different parts of the country.

SELECTED
FIRST AND SECOND PLAN ACHIEVEMENTSAND THIRD
PLAN TARGETS

SELECTED
FIRST AND SECOND PLAN ACHIEVEMENTS
AND THIRD PLAN TARGETS

14.
In the course of the Third Plan, the nation sets out to achieve as much
in five years as has been realised in the ten years of the First and the
Second Plan. The task is large in magnitude, urgent, and of great significance
for the present and the future.Its administrative implications
are vast and call for the highest standards of efficiency attainable in
every field of activity. Effective implementation requires the maximum
mobilisation of resources, adaptation to changing needs, co-ordination
and concentration of resources at every vital point, ability to anticipate
difficulties and problems, readiness to seize upon favourable opportunities
for growth and, above all, men of skill and knowledge and organisations
attuned to the objectives of the Plan. A plan of development, however
elaborate or precise, is at best a framework which sets broad patterns
for action, for participation in the national endeavour, on the part of
millions of people living and working under conditions of marked diversity.
Its success rests on a variety of factorson widespread understanding
of the challenge and the burdens of development, on the release of new
productive forces and increasing application of modern science and technology,
on changes in outlook and motivation and, finally, on a climate of confidence
that rapid economic development is the means both to social justice and
to wider economic opportunity. These are among the principal conditions
for achieving fully the advance envisaged in the Third Five Year Plan.